purpose in finding sanity and truth and a common sense often prressive future for this country we love. start watching as soon as you can. to paraphrase the great and dearly missed newsman, if it's 7:00 p.m., it's "hardball." that's "hardball" for now. thanks for being with us. "all in with chris hayes" starts right now. good evening from new york. i'm chris hayes. tonight on "all in," it's ted cr cruz's coming out party. i'll tell you why in a minute he's not just another whackadoo. live to dallas, texas, where ted cruz is about to speak in just a moment. see the big defund obama care banner which lets you know what the event is going to be like. also tonight the terrifying prospect that one result of the bankruptcy of the city of detroit could be the thousands of potential personal bankruptcies caused by the slashing of retirees' pensions. a full discussion on that is

coming up. all that plus i am absolutely geeking out a little bit over what i think is the coolest car ever. the tesla. i will tell you why it's so cool but also why it's so important. but tonight we begin with a man who i believe is the most dangerous politician on the american right. in october 2007 i sat in the media gallery of the united states supreme court and watched the solicitor general of texas argue on behalf of the state that he should have the ability to put to death a mexican national, jose, who had been convicted of raping and murdering two teenage girls in houston. he won that argument and he was executed by texas on august 5th, 2008, despite the objections of the united nations and the international court of justice. at the time, i had no idea who this man arguing on behalf of texas was. but all i could think was holy crap, this guy is good. it was one of his nine times arguing before the supreme court and he was witty, incredibly fast on his feet and clearly had a brilliant legal mind.

it is to this day one of the most impressive displays i have ever seen before the court and i have had the good fortune to spend a lot of time there. so you can imagine my horror in 2012 when i tuned into the texas senate race. i hadn't been paying much attention to. and realized that lieutenant governor david dewhurst, the republican establishment candidate, was being prepared by a tea party candidate who was the same guy i saw kick ass in the supreme court in 2007. i thought that night, night i made that connection, oh, this is trouble. and trouble that man has been. trouble in every direction. as he vies to be the singular voice of the right wing grassroots and as he has very quickly assumed a leadership role in movement. he's a man who combines the intellectual credentials and pedigree of barack obama, with the raw right wing populist appeal of sarah palin. his full name is rafael edward cruz. he was born in calgary, alberta,

in canada. wz we learn this week when he released his birth certificate to the dallas morning news. he's 42 years old. born in canada to an american mother, likely a dual citizen of canada and the united states. something the senator from texas seemed shocked and upset by. late last night in a response to the story revealing the likelihood of him having dual citizenship, "i will renounce any canadian citizenship. nothing against canada, but i'm an american by birth. as a u.s. senator, i believe i should be only an american." the interest in senator cruz's citizenship comes for only one reason because the right wing of the republican party is increasingly betting on him as their presidential candidate. tonight he takes one step closer to that future, coming before the people of texas to stake his claim as the leader of the national political scene's most reactionary elements. joining me now is nbc news reporter kacie hunt live at the heritage action defund obama care town hall tour in dallas. kacie, the morning note this morning nbc news put out was talking about the stuntness of

the defund obama care movement. this essentially is not going to get anywhere in congress. my question is, is this a vehicle for ted cruz? or is this actually a serious effort? >> reporter: this is a way for ted cruz to speak directly to his base. he's carving out this niche as the guy who's willing to take these stands even if they're unpopular with moderates in his party. you know, senators like senator minority leader mitch mcconnell is even having trouble with the way cruz is positioning himself. excuse me. you were talking about whether or not he is a citizen and he actually addressed that at some length with reporters just before this meeting, and, you know, he didn't call himself a natural born citizen. he said i'"i've been an america since birth." he refused to speculate whether or not he'd be eligible to run for president. he said he was going to leave that to legal scholars. >> you know, it's interesting that ted cruz, this has come to sort of bite him back, all of

the worry about birth certificates and so forth have come back to bite ted cruz. that the reason being that basically that all this noise had been made over barack obama's birth certificate, and so now ted cruz is forced to litigate this, in my mind, ludicrous absurd issue precisely because there was such a long sustained movement on the american right to question barack obama's birth certificate and whether he, himself, could actually be president of the united states. >> reporter: a couple things on that. cruz was asked, also, if there are any similarities between his situation and questions about his citizenship, and the questions that president obama faced that eventually led him to release his long-form birth certificate. cruz also refused to speculate on that. so he wouldn't, you know, distance himself from it. he also wouldn't, you know, draw any distinct parallels. the other thing i'd point out, i was in iowa a couple weeks ago with activists at bob vander

platt's family leader program. it was something i heard murmurings about. activists in iowa were concerned whether or not he was a natural-born citizen and could, therefore, be eligible. it was clear to me at that point those questions were simmering underneath the surface enough that at some point cruz was going to have to address them. thanks to the "dallas morning news" it happened sooner rather than later. >> answer this for me, kasie. who shows up on a wednesday night, or tuesday night at 7:00 p.m. central time for a defund obama care town hall? who are the folks in that room that ted cruz is going to be speaking to? >> reporter: they're all supporters of the heritage foundation and heritage action. heritage action has a long history of being a really powerful group that actually does hold a lot of sway over republicans, especially in the house of representatives. so the people i've talked to here so far are really, you know, they're ardently against obama care, as they call it, the president's health care law.

they're huge fans of ted cruz. most of the people that, you know, i spoke to who are trickling their way in are here particularly to see him. the heritage foundation is claiming that this is an oversold crowd. we'll see. they're still trickling into the ballroom behind me. there were pretty long lines to get in as i was walking over here. this event was supposed to have started a few minutes ago. we're running a little bit late. we'll see if they fill up the room and fill up the standing room as they promised. >> nbc news reporter kasie hunt. thank you so much. >> reporter: thanks, chris. >> joining me, evan smith, ceo and editor in chief of the "texas tribune." there's polling i found interesting. this is texans saying they favor ted cruz over rick perry for president in a gop primary by quite a good margin. 18 months ago. i don't know how much name recognition ted cruz has. it speaks to how successful he's been in cultivating name recognition and kind of star aura around himself in just his very young senate career. >> right.

2 1/2 times the response we saw for perry in that poll. the reality is he's tapping into a very angry base of republicans, tea party republicans. the most conservative element of what is a very conservative republican party already in texas. he is their folk hero in the same way. last time you and i talked, wendy davis has emerged as the democrats' folk hero in texas. he's voicing their concerns, their antipathy for the president. their belief that obama care is a fraud and is unworkable and should be defunded immediately. i'm with the whole conversation about it almost doesn't make a difference if the effort works. it's, he's speaking to the concerns and the fears of people out there, and ultimately it helps build his brand and ultimately stokes those flames and the fight fwogoes on. the outcome is less important than the fight, itself. >> the outcome will matter because the outcome will matter insofar as whether or not they can force this on to the agenda, have some kind of thread of default or shut down the government which will have real consequence in people's lives.

also real political costs for the republican party. what i think is interesting here is that ted cruz seems to me uniquely positioned to essentially pull off what is an increasingly difficult thing for any republican standard bearer to do, which is to tell the base what they want to hear in the most reactionary terms, in the most red meat terms possible, but to be able to have behind-the-door conversations with essentially the mockers and power brokers the republican party, and says, hey, look, i'm harvard law, i know what the deal is, i know how this game is played, and essentially soothe them that he is not some yahoo. pulling off that complicated dance, it seems to me ted cruz is better suited for than almost anyone. >> also, if he loses, he wins. i think by waging the battle even if he comes up short, the people in his own party who oppose him become part of the group of enemies he's fighting against. he needs to position himself in the 2016 primary, period, not against the democrats but against the apostates in his own

party. if he's not able to generate the support for this whole litany of things beginning with defunding obama care, that's okay because he now has them to run against as well. you're correct, he's well positioned to play both insider and outsider. i wouldn't expect to see him in a harvard sweatshirt campaigning on the campaign trail. it doesn't exactly help him to be part of the effete, elite east coast establishment that has really become his best punching bag in this whole fight. >> i want to play you a bit of sound of him talking about speaking on the senate floor. the reason i want to play it for you to set it up is he has not gone by the normal young senator, deferential, quiet kind of approach that a lot of senators do. particularly star senators when they come into the united states senate. think about hillary clinton, even barack obama in the beginning. he's been very loud, very outspoken, and it is very easy to find people in washington in the republican party who cannot stand the guy. here he is essentially saying why that is. take a listen. >> you may not know that, but

that was actually my first time ever to speak on the floor of the senate. there is a tradition in the senate that junior senators should be seen and not heard. i haven't entirely managed to comply with that. >> does this guy have as many enemies in texas as he already done in d.c.? >> oh, most definitely he does not, and the reason he does not is because the same people he's fighting against, the people back in texas, don't like either. he is -- he is an emblem of the anger of the state of texas institutionally against the federal government. what rick perry has talked about for the last couple years, ted cruz has now doubled down on that idea. every time he runs afoul of lindsey graham or john mccain or mitch mcconnell, he becomes more popular in texas as a result of that. you may think that "the new york times" and the "washington post" and members of his own party attacking him weaken him in texas. it's the thing he feeds off of.

it makes him stronger. >> princeton, harvard, man. evan smith from "texas tribune. thanks so much. >> thanks, chris. top secret government officials show up at a newspaper and supervise the destruction of hard drives containing highly newsworthy documents. you've had your fun, one official tells the paper's editor, now we want the stuff back. that true story is coming up. s♪ [ male announcer ] from the last day of school, back to the first. they're gonna write a lot. so make sure they've got somewhere to write it. this week only get composition books for a dime. staples has it. staples. that was easy. [ beeping ] ♪ [ male announcer ] we don't just certify our pre-owned vehicles.

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thought he'd be the center of an increasingly high-stakes, international, political, intelligence and media battle over the world's most closely held secrets. he finds himself in precisely that position. he's a brazilian national, partner of "the guardian's" glenn greenwald, writing stories on edward snowden's leaked nsa documents. this past sunday miranda was detained by authorities in heathrow airport, returning from a trip in berlin where he met up with greenwald's clab raollabor laura poitras. he had his laptop confiscated, a mobile phone, smartdisk and video game console. he was held for seven hours under the terrorism act of 2000. asked about his association with greenwald and "the guardian's" reporting. miranda's lawyers are threatening legal action over what they and others are calling his, quote, unlawful detention. british government defended its

decision to detain miranda in a statement today saying it was their right to stop anyone suspected of carrying "highly sensitive stolen information that would help terrorism." when u.s. officials were asked about the incident, they said they got a heads-up the london police were going to detain miranda but insisted they had nothing to do with it saying "this was a decision made by the british government without the government and not the request of the united states government." the editor of "the guardian" recounted yesterday a series of absolutely jaw dropping top-secret conversations with the highest level of uk intelligence officials. the gist of these talks being hand over the snowden material, the hard drives the agency believed contained leaked files or destroy it or we will stop you from publishing it. uk's officials going on to say things ominous like "you've had your fun. now we want the stuff back." and "you've had your debate. there's no need to write anymore."

what you are looking at is a macbook from "the guardian the" that held stuff from edward snowden. >> joining me alan russbridger, editor in chief of "the guardian" newspaper. you write in the piece in the "the guardian" about being contacted by a representative of the uk government who claimed to speak to the prime minister over two months ago. i wonder was this before "the guardian" had published any of the edward snowden documents? >> no, we had published some of the documents so this was, i guess, some weeks into our handling of this material. >> had you had any conversations with the uk government prior to publishing? i know in some similar situations in the u.s., in regards to the nsa and wikileaks and "the new york times" had extended negotiations with the bush administration. had you had any interface with the uk government before you published the first snowden document? >> we have been putting matters

to both the u.s. and the uk governments and allowing them time to respond and make representations before most of the stories that we published. >> were you surprised by what you refer to as the steely tone and increasing escalation of what can only be interpreted as threats from the uk government over publishing what you are publishing? >> well, to begin with, the discussions were cordial and didn't feel threatening, but there came a point about just over a month ago where the tone changed and there was an explicit threat to use the law if we didn't either return the material that we had or destroy it. >> and so how did you respond to that? >> well, it may be difficult for american viewers to understand the british context and this is

partly why i published this piece yesterday. so you got a context in which there is no first amendment in the uk and there's no bar against prior restraint. the restraining of newspapers or news organizations to stop them publishing material in advance of publication. so in a world in which i explain to the british government that we had this material already in america and glenn greenwald has it in brazil, it seemed to me to misunderstand the nature of digital communications to be destroying a hard disk in london. but as they were adamant they would go to law, i thought it was simpler to get on with the reporting from america and destroy the copies that we had in london. >> which means agents from the uk government came to "the guardian's" offices with, what, sledgehamm sledgehammers? with -- i mean, honestly, how did it -- like, physically, how did it go down?

there was a hard drive on the floor and you watched as agents of the government battered the thing? >> well, this might seem a nice distinction, but i was not going to hand these, this material to the government in any way. so i said we would destroy it, but if they wanted to supervise the destruction, when they could. so they sent along two technicians from gchq. that's the equivalent of the nsa. and they advised on what you have to do in order to destroy a machine so that it is of no use to anybody else and nothing can be retrieved from it, which is a bit more complicated than i had imagined. >> so "guardian" employee went through the process of smashing to bits, burning the unrecognition. whatever it is. while two agents of essentially the uk's version of the nsa watched over and made sure the process was being done. all the while, a copy clearly of these files exist, i don't know where, in brazil, the u.s., somewhere, and you are redoubling your efforts.

you are, intend to publish, to continue publishing stories from this trove of documents? >> well, that, to me, has been the overriding priority. that there is material there which i think deserves to be aired and which is of some public importance. and that's why i didn't want to get caught into a situation in which effectively a judge would have control of the snowden material. >> are you going to find yourself -- are you going to find yourself before a judge? are you going to find yourself brought before a court, indicted in some form if you continue to do this? do you have any fear about that? >> well, i don't believe that that will happen, and if you listen to the attorney general holder, he's made it explicit that he doesn't intend to prosecute journalists for doing journalistic business in the united states. so i believe that protections are in the 1st amendment and absence of prior restraint in america are as high as anywhere in the world, and i don't believe that journalists are going to be at risk for doing

journalism in the states. >> alan rusbridger from "the guardian." thank you for your time. all right. i'm going to completely geek out over the new tesla model "s," literally the best car ever made. ever. that's coming up next. rebecca: whe renewal notice. by about $110 a month. roll the dice. care act was passed, company to go down by about $60 a month. little guy rebecca: the law works. this day calls you. whe to fight chronic osteoarthritis pain. to fight chronic low back pain. to take action. to take the next step. today, you will know you did something for your pain.

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last night the greatest press release in the history of press releases was posted and unlike basically every other

press release ever posted, it quickly tore through social media and elicited excited oohs and ahs and whoas including i will admit from yours truly. it comes from the electric car company, tesla motors. the headline says it all. "tesla model s achieves best safety rating of any car ever tested." now, before getting into the content of this, keep in mind the context here. the model "s" is the first car from the first big new u.s. automaker in decades and it's not just the first car company, it's a car company founded to make good on a century-old dream of a consumer mass-produced electric car. it is the ultimate david vs. goliath story and a story many thought for years was a very expensive joke. tesla after ulosing lots of mony and getting a government loan made a car, a vehicle that could be driven and poked and prodded and tested and something incredible happened. it turned out the car was awesome.

if you're skeptical, look no further than the independent review from "consumer reports." the model "s" earned the magazine's top test score and plenty of accolades. >> this car performed better than any other car we have tested. >> it just outperformed just about everything. it's quick, it handles well, rides well, it's quiet. sup super quiet. >> stealth and downright cinematic to boot. it's what marty mcfly might have bought back in place of his deloreon in "back to the future." i assure you, this is not a commercial for tesla, but love for this car goes deep. even the government guys who conduct crash tests gushed about it. and that was the subject of the press release the company posted last night. after getting raves from "consumer reports" and auto heads, it was time for safety regulators to weigh in. lo and behold, their definitive conclusion is this thing is the safest car they've ever tested. the national highway traffic safety administration gave the model "s" the highest rating

it's ever given because it can take a hit like no other. model "s" earning five out of five stars in every category. get this, even got an overall score above five stars. a total of 5.4. an "a"-plus, plus. why is this car so safe? mainly because it is electric. tesla explains the model "s" has advantage in the front of not having a large gasoline engine block creating a crumple zone to absorb a high-speed impact. the motor is a foot in diameter and mounted close to the rear axel. and the front section that would normally contain a gasoline engine is used for a second trunk. all that doesn't mean much to you, consider this. tesla says the roof of its model "s" is so strong that it broke the testing machine that was used by government regulators. as you can imagine, all this awesomeness comes at a price. a steep one. about 70 grand for starters which is out of reach for your

average consumer. it's a small step toward a zero emissions future, and that's why this is a big deal, because if we're going to avoid a prolonged era of climate change-induced misery, we're going to need a whole lot of things. we're going to need grassroots movements, huge political changes and a whole variety of massive engineering innovations in about a dozen sectors that totally and completely transform our industrial system and how it is powered. this is the frontier of that. we desperately need american capitalism to stop spending its time and resources and ingenuity and human capital figuring out how to make money with glorified bets in the wall street casino, or how to make money by squeezing down prices of consumer goods by tapping ever cheaper labor market and pushing down service sector jobs and wages and instead doing what american capitalism does at its best. build a better mouse trap. take an idea, take some capital, take some risk and try to build

something new and awesome and world changing. we need that everywhere. the tesla model "s," the best car ever made is just the beginning. think about what might be coming next. we'll be right back with #click3. no, no, no! stop! humans. one day we're coming up with the theory of relativity, the next... not so much. but that's okay -- you're covered with great ideas like optional better car replacement from liberty mutual insurance. total your car and we give you the money to buy one a model year newer. learn about it at libertymutual.com. liberty mutual insurance. responsibility. what's your policy? but with advair, i'm breathing better. so now i can help make this a great block party. ♪ [ male announcer ] advair is clinically proven to help significantly improve lung function. unlike most copd medications,

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imagine working hard your entire career for a pension you plan to live on in old age and the city that's supposed to provide that pension goes bankrupt. it's happening in detroit. and the fate of those people, their story, is coming up. but first i want to share the three awesomest things on the internet today. we begin with a microblog's twist on one of the summer's most shared photo trends. behold the hot dog legs tumbler. a site that asks the viewing public to determine whether you're looking at a selfie taken on the beach or two frankfurters like a pair of legs. some are calling it the tumbler of the summer. either way, the man is trying to co-opt the trend, fat cat hot

dog conglomerates are guessing the game. as for this broadcaster, when it comes to legs and hot dogs, i always prefer hot dogs that have legs. second awesomest thing on the internet today, a video going viral on youtube which features the gospel choir of an unidentified church giving the congregation very healthy advice in this age of social media. ♪ ♪ yes, keep your business off of facebook. it's advice we could all stand to listen to. some of us more than others.

and the third awesomest thing on the internet today is a basketball twofer, beginning in an airport where denver nuggets guard nate robinson is dribbling and everyone else is traveling. the instagram account proves a true baller all dribbles. we never see nate get to the rim, which is not true of this backyard shot on youtube. 800,000 people have watched the video, crazy 11 man pool dunk, and it is aptly titled. >> yes, they let the bro in the banana hammock. speedo guy works the entire perimeter of the pool before the reverse alley-oop. a summer well spent, gentlemen. #broswithtoomuchtime on their

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midnight deadline. more than 100 formal objections were filed in all, including handwritten letters from some of those very same retirees. people who did nothing but work for a living with the promise they wouldn't have to die in poverty. objections run the gamut, that it violates both the state and the u.s. constitution, and that the emergency manager, kevin orr, is miscalculating how much detroit's pension obligations are underfunded. the average amount pension holders, aka city retirees, are getting, is $19,000 a year. the amount is higher, $30,000 a year for police and firefighters but still well below other major cities. from the individuals who filed formal objections, there are examples like steven johnson, a 73-year-old retiree who worked for 22 years as a city boiler inspector. "a reduction in my pension will place me and my spouse in hardship that may result in us filing for bankruptcy." mary duggans, a nurse who worked

for the city for 16 years "i need my pension for basic human needs. i'm 80 years old with age-related medical conditions. therefore i have to pay for medical co-pays as well as prescribed medications." these people, they're not the ones that bankrupted detroit. all they did was work for years for not a ton of money, and a promise they wouldn't have to die poor. they are the ones who are going to be most at risk in a bankruptcy proceeding. today we learned there's a lawyer whose sole job is to make sure all the other lawyers involved in this mess don't get paid excessively. that's right, a lawyer acting as a fee examiner, that guy is getting paid $600 an hour, discount it should be noted from his usual $f6 his usual $f6 75. with -- as the largest municipal

bankruptcy worked its way through the court, what you're seeing is all sectors panicked about who gets hurt and who gets saved. it's going to be completely disconnected from any semblance of the normal mechanisms of democratic accountability. the bankruptcy court is not a democracy. it is a dictatorship by design. joining me now, lee saunders, president of the american federation of state, county and municipal employees. afscme, afl-cio union. lee, you registered your objections to the bankruptcy proceedings in court. what are your objections? >> well, first of all, we believe that the state and the city are actually acting illegally by attacking the pensions of retirees who have worked for 30, 35, 40 years for the city of detroit. pensions are an obligation, and pensions are an obligation within the state constitution. we believe that it's illegal for the city to go after the pensions of these hardworking detroit citizens. making $19,000 a year in their pension -- in their pension

payments. we just think that that's wrong. it's illegal. it's unconstitutional. so we've been in court. we're going to remain in court. there will be hearings on this. there were hearings yesterday. and then the judge will decide sometime in october, i believe, whether we can stand our ground and say that it's unconstitutional to attack the pensions in detroit. >> i've covered a number of bankruptcy disputes between labor and bankruptcy court judges in my time as a reporter, as a labor reporter, and let me give you the argument that you always hear from the other side. particularly from the bondholders in this case. look, any bankrupt entity has more obligations than it can pay, and those obligations include in the case of detroit bondholders, you know, other folks the city has borrowed money from, and pensioners are just one of those folks. they need to get in line, and the way a bankruptcy process works is everybody is going to get hurt a little bit because that's what bankruptcy looks like. what do you say to that argument? >> i say this. chris, we've been in detroit.

i've had staff in detroit talking to the retirees. 20,000 retirees. more than 20,000 will be affected if, in fact, their pensions are attacked in any kind of way. again, our pensioners make on average $19,000 a year. they gave their lives to public service in that city. working 30 and 35 years. $19,000 a year is not a lot of money. i couldn't live off of that. i don't believe you could live off of that. the banks definitely couldn't live off of that. the folks in corporations couldn't live off of that. yet we are attacking the people that serve the city well. and we've been interviewing these retirees across the city. you know what they tell us? they tell us that if their pensions are reduced, they won't be able to pay health care. they won't be able to buy prescriptions. they won't be able to put food on the table. they will lose their homes. this is a real tragic story, and this is america. and we've got to fight any attempts to attack workers and attack retirees who have given

their lives. given their lives to the service and the service of the city rather than -- rather than attacking them, we've got to make sure they can retire in dignity. and that's what we're fighting about. that's what we're fighting about. we're not only fighting about this in detroit, but let me tell you something, chris. if it happens in detroit, it's going to happen in other major urban areas across the country. we're not saying that there's not a crisis, that there's not an economic crisis in troit ade and other cities across the country. what we are saying is don't scapegoat work who are have given their lives to public service. >> that point, i think, is a really interesting one because, again, as a labor reporting in the private sector, this happens a fair amount. companies will enter into bankruptcy and it's a very convenient means of ditching big pension obligations because they can go before a bankruptcy judge and can slough off a lot of pension obligations and pensioners are told, well, sorry, tough luck. and you fear that we could see the pioneering of a process like that in the city of detroit

which, with this largest bankruptcy in history, where if this is allowed to happen, this could be something that other cities use as a model? >> i don't think there's a question about that. that's why we've got to stop it dead in its tracks in detroit. again, i don't want to underestimate the fact that detroit is experiencing economic difficulty. there's no question about that. manufacturing jobs have been lost in that city based upon corporations moving their jobs overseas. government jobs have been lost. but we have sacrificed. public service workers have sacrificed in that city. we've given up wage increases. we've had reduced wages. we've given up reductions in benefits and health insurance to keep the city afloat. we cannot be used as a scapegoat, as i said, for all of detroit's problems, and we've got to deal with this, chris. i believe not only as it effects detroit but the national government. this administration has a responsibility to deal with the problems and impact on urban

centers across this country. the engines. the engines of states who are experiencing financial difficulty. i'm not saying we've got to bail everything out, but if we can rescue cities and countries in europe, if we can bail out wall street, which we did, if we can rescue the auto industry, which was the right thing to do, then i think we've got to think about creative measures in which we can help urban centers across the country experiencing financial difficulty. >> do you worry about who will have sufficient power as this process rolls forward in bankruptcy court to look out for workers? we're now -- we've now -- we're now no longer in the world of democratic politics. we're in the world of the court of law and you have lawyers that are making a case about the illegally of this. are you worried that now that it's been taken out of the hands of any kind of semblance of self-government, it's been put into a bankruptcy court, that --

yes, please? >> i'm sorry. go ahead. i'm sorry. >> no, the most powerful people in that court are going to be the wall street lawyers. >> well, i mean, we've got to fight it, and we've got to make our voices heard in the city of detroit and around this country. that's why we're organizing our retirees. we're organizing our communities. folks who believe that if you play by the rules every single day, then you deserve a decent retirement that cannot be attacked. it cannot be reduced. we have to continue to mobilize our communities. i mean, we're going to be in court. we'll do anything we possibly can to protect the rights of our retirees. those folks who have provided essential services to the citizens of detroit. >> lee saunders, i want you to stick around, because if you watch conservative media, if you read the right wing, it's the public sector unions bankrupting america, and detroit is just the beginning, you're to blame for all of america's problems. i want to talk about that right after this break. hey linda!

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they got used to the great union benefits, the retirement health care. they got used to all the other, you know, handouts of money from the government, and when hard times arrived, it was impossible to in the end do anything because it would be seen as a cruel reduction of x, y and z. >> that's charles krauthammer giving the right wing take on the bruches in detroit. still with me is lee saunders from the afscme union, and dean baker, co-director for the center of economic and policy research. dean, you've been seeing this ever since detroit filed, before it filed, that detroit is everything wrong with liberal governance. if they give everything out in handouts and public sector unions getting exorbitant contracts that you bankrupt the city eventually, you chase out

all the makers, leave just behind the takers. what do you think about that? >> just about every part of that is wrong. let me back up a second, though, to pick up on one of the points lee made. this is a contractual obligation. i just find it kind of striking here because there's such a selectivity about how we view the contracts. you might remember back when aig was bankrupt. there was a big issue they had these bonuses for their top people. hundreds of thousands of dollars per person. and we ended up paying them because we got lectures including from people in the obama administration about the sanctity of contracts. well, here you have contracts with workers guaranteed by the state constitution that apparently don't mean anything. >> let me just emphasize that because that episode was, it was fairly early in the obama administration. there were all these bonuses set to be paid to top aig executives. th they were going to be lots own lots of money. there was large outrage across the political spectrum.

the answer from everybody were these bonus had to be paid because these were contractual obligations and you could not just rip up contracts. >> exactly. and here it is, you know, when it's ordinary workers rather than folks on wall street, they're prepared to rip up contracts. that's what we're talking a ini here. i think people should be outraged. lee's exactly right. he's emphasizing the hardship. also, again, you know, i'm not a lawyer, but these are contracts you'd expect to see honored. you know, taking this piece by piece, "a" we know public sector workers are not paid more than private sector workers on average. we've done research on that. friends at the economic policy institute have done that. when you adjust for experience, for education, what you find is their pay actually is a little bit less. it's generally made up, more or less, by benefits. public sector workers tend to have better retirement benefits, health care benefits. even with that, again, it will vary city by city, state by state. their pay ends up being a little bit less than the private sector

counterparts. simply not true. you don't have the story of public sector workers, at least on average. i'm sure there's someone, somewhere. on average, they're not living high on the hog. the other part of this story that's incredibly cynical, we had horrible national policies that have devastated industrial areas like michigan, like ohio, like illinois, where i'm from, and the cities have been hit hardest by this, and you get this incredible cynical story where "a," we sort of ignore the national policies that had a devastating impact on our manufacturing sector across the country, but then "b" on top of that we have the sort of perverse urban policy where you could just step over the city line and leave all the problems behind you. and that's happened in a really big way in detroit. and it's not something overnight. this has been going on for 40 years. 3 40-plus years. surprise, surprise, you eventually end up with a very bad story. >> lee, just stop right there for a second, dean, because i want you to weigh in here and i want you to respond to what we are hearing from conservatives about detroit which is two pronged. one is that this is the -- this

shows the bankruptcy of liberal governance, but also to use it to talk about public sector unions as basically the villain in this tale and the villain not just in detroit but in municipalities and states across the country as the folks that are putting local governments in dire straits. >> i would argue that we aren't the villains. i mean, we are unions representing collectively workers and working families who are trying to make ends meet, play by the rules. they are doing everything bit they can -- everything they can to serve the public. they're making very modest income with a modest retirement. $19,000 a year, again, in the city of detroit is not exorbitant. it's modest. i would say that we are not the villains. wr unions are not the villains. working families are not the villains. the real villains are the corporations and the banks and wall street who are trying to continue to rip off working families, trying to rip off

people who are trying to play by the rules every single day. taking advantage, trying to gain more power and more wealth at the expense of working families. not only in detroit, across this country. but across this country. that's what we've got to get that word out. i mean, this is blatantly unfair. blatantly unfair when you're attacking pensions. when you're attacking health insurance. when you're attacking unions and attacking contracts. when, in fact, corporations in wall street are making billions and billions and billions of dollars at the expense of those trying to play by the rules every single day. >> dean, the argument you hear from conservatives about this, about this dynamic is there's something perverse about local elected leaders being able to make pension promises out into the future that they won't actually have to deliver on, and that it's very easy to essentially pander to afscme or to public sector unions with future promises of pensions and this is a structural problem that we have to be clear-eyed and face head-on.

what do you say to that? >> there have been irresponsible officials beating up on former mayor daley in chicago. he didn't make payments. look, it's not just pensions. cities sign deals all the time. may mayordaley in chicago signed a deal with morgan stanley turning over operation of parking meters for 75 years and probably got half, if even that of what he should have gotten on a fair deal. that's the way governments work. you make long-term contracts. you want transparency and you want to see that people in this case make the commitments, make the payments that they're supposed to make. daley's case, incredible story. here's this guy, he went a decade without making payments to the pension funds. he obviously knew what he was today and today goes around, on corporate boards, foundation boards. this guy is the bernie madoff of big city mayors but he's touted to the sky. so, you know, you do have irresponsible people. no doubt about it. >> yeah. i think the point here, lee, and dean, is really important is that when those promises were